By Michael P. Tremoglie
Minnesota’s Department of Labor and Industry, Research and Statistics division has published a report examining workers’ compensation data from 1997 to 2013, the most recent available. The results show that the state is mirroring nationwide trends.
Indeed, according to the report, “by counteracting the increasing trend in benefits per claim, the falling claim rate has brought system cost per $100 of payroll to historically low levels.”
Brian Zaidman, one of the authors of the report, told IBA in a telephone interview that the reason the benefits per claim are increasing is a result of the increases in medical costs - much more so than indemnity benefit costs.
Zaidman also noted that claims have been decreasing for various reasons. One is that the nature of work has changed. There are, generally speaking, less dangerous occupations than in the past. Also workplaces are becoming safer.
“Medical care is also improving. Injuries result in fewer days away from work,” he added.
Among the report’s significant findings are:
- There were 4.6 paid claims per 100 full-time- equivalent workers in 2013, down 47% from 1997.
- The total cost of Minnesota’s workers’ compensation system was an estimated $1.62 billion for 2013, or $1.35 per $100 of payroll. Total cost per $100 of payroll follows a multi-year cycle, in line with a nationwide insurance pricing cycle; however, it seems to show a long-term downward trend.
- In 2013, on a current-payment basis, the three largest components of total workers’ compensation system cost were medical benefits (36%), insurer expenses (31%) and indemnity benefits other than vocational rehabilitation (29%).
- Pure premium rates for 2013 were down 32% from 1997, at their lowest level since that year.
- Adjusting for average wage growth, medical benefits per insured claim rose 97% from 1997 to 2012 while indemnity benefits per claim rose 43%. All of the increase for indemnity benefits occurred by 2003 and for medical benefits by 2008. The average 2011 workers’ compensation claim cost $10,120 for medical and indemnity benefits combined (including vocational rehabilitation).
- Relative to total payroll, indemnity benefits were down 19% between 1997 and 2013, while medical benefits were down 2%; this reflects the net effect of a falling claim rate and higher benefits per claim. Medical and indemnity benefits (including vocational rehabilitation) amounted to $.83 per $100 of payroll for 2013.
The report did not examine any effects Obamacare had on workers’ compensation.
